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Spectrum Pharmaceuticals Inc (SPPI) Q3 2019 Earnings Call Transcript

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Spectrum Pharmaceuticals Inc (NASDAQ: SPPI)
Q3 2019 Earnings Call
Nov 7, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Spectrum Pharmaceuticals Third Quarter 2019 Earnings Call. [Operator Instructions]

I would now like to hand the conference over to your speaker, Shiv Kapoor, Vice President, Strategic Planning and Investor Relations. Please go ahead.

Shiv Kapoor -- Vice President of Strategic Planning and Investor Relations

Thank you. Good afternoon to everyone. Thank you for joining us today for Spectrum Pharmaceuticals third quarter 2019 Financial Results Conference Call. Our press release is available on our website at www.sppirx.com. Joe Turgeon, our CEO and President, who will start the call and provide an overview followed by a financial update from our CFO, Kurt Gustafson, and discussion about clinical development progress from our CMO, Dr. Francois Lebel.

Before we get started, I would like everyone to please refer to the notice regarding forward-looking statements included in our -- in today's press release. This notice emphasizes the major uncertainties and risks inherent in the forward-looking statements that we will be making this afternoon. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements.

With that, let me hand the call over to Joe.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, Shiv, and good afternoon. Welcome to everybody on the call. I appreciate your interest in Spectrum. And we remain highly focused on our late-stage assets, Poziotinib and ROLONTIS. Let me begin with update on our progress. The Poziotinib program, which targets hard to treat mutations in lung cancer is in full swing. We have a broad development program to explore its full potential and are pleased with enrollment. We're expecting results from the first cohort of the ZENITH20 trial in December. Dr. Francois will give you a comprehensive update of our expanded Poziotinib program in just a few minutes.

ROLONTIS is our late-stage drug being developed for the treatment of chemotherapy induced neutropenia. As you recall, we voluntarily withdrew our BLA application earlier this year. Since then, we worked closely with the FDA and recently submitted a robust package. We look forward to competing in this market.

Let me give as a direction I'm moving this Company. Our focus is crystal clear. We are developing two late stage assets and expanding the pipeline. We made significant progress and have shifted from small niche products to higher value targets through divestiture of our legacy assets, advances in our late-stage products and the acquisition of the FIT platform. We've focused on our strategic priorities and we are aggressively pursuing opportunities to expand our pipeline. With growing pipeline, significant near-term milestones, solid capitalization and a highly focused team, we're in a strong position to drive these programs forward.

With that let me turn it over to Kurt to go over to financials.

Kurt A. Gustafson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Thanks, Joe. Let's start with continuing operations. Our SG&A expense for the third quarter of 2019 was $13.1 million versus $17.2 million in the previous quarter. R&D expense was $17.2 million versus $17 million in the previous quarter. And our net loss from continuing operations was $26.6 million versus $28.8 million in the prior quarter. On a non-GAAP basis, which primarily backs out stock compensation costs, our loss for the quarter was $24.5 million. This quarter, income from discontinued operations was $572,000 relates to the commercial business that was sold to Acrotech.

As we look ahead, we continue to expect R&D expenses to increase as we expand clinical development in manufacturing for poziotinib and ROLONTIS. We ended the quarter with $252 million in cash plus marketable securities giving us plenty of runway to continue the development in commercialization of our late-stage assets.

With that, let me now hand the call over to Francois to cover updates on our clinical programs.

Francois Lebel -- Chief Medical Officer

Thanks, Kurt. Hello, everyone. I'm going to start by providing an update regarding our late-stage asset poziotinib. Our primary focus remains investigating pozi for the treatment of exon 20 insertion mutation in non-small cell lung cancer. Exon 20 mutations are among the most difficult to treat and currently have no FDA approved therapy. These patient and their physician are in critical need of effective treatment options.

ZENITH20 is a comprehensive multi-cohort study evaluating a broad range of lung cancer patient with specific mutations, Cohorts 1 to 4 are each independently powered with pre-specified statistical hypothesis with a primary endpoint is objective response rates.

The top-line results from Cohort 1 evaluating pozi in previously treated EGFR patients with exon 20 insertion mutation are expected in December. Let me remind you we have a world-class group of clinician scientists who are on our independent review committee who will rule on whether we met the primary endpoint of ORR based on the protocol. We expect to share this information with you in December.

Cohort 2, which is evaluating pozi in previously treated for HER2 patients reached full enrollment in Q2, six months ahead of schedule. We are pleased with the enrollment for Cohort 3 and 4, which are evaluating first-line patients. Based on promising preclinical data presented recently at World Lung Conference in Barcelona, 3 new Cohorts, Cohorts 5, 6 and 7 were added to the study and are actively enrolling patients. Cohort 5 includes previously treated and treatment-naive non-small cell lung cancer patient with EGFR and HER2 exon 20 insertion mutation.

Cohort 6 include lung cancer patient, who are osimertinib resistant. Cohort 7 include lung cancer patient with a variety of a atypical mutation. In addition, we are collaborating with MD Anderson Cancer Center on an investigator-led basket study that will be evaluating pozi in various mutated solid tumors. This study has already enrolled its first patient. We are excited about these development especially when they will start to mature in the near future.

Now shifting to ROLONTIS. ROLONTIS is a novel long-acting GCSF seeking an indication for the treatment of neutropenia and patient receiving myelosuppressive cancer therapy. On October 24th we submitted an expanded BLA to the FDA. The withdrawal seven months ago was driven by module three or the CMC section. Since then we've had productive dialog with the FDA. We implemented our guidance, provided additional data and rerolled and reorganized certain sections of the file resulting in a strong submission. As a reminder, our BLA is based on robust clinical data from two large pivotal independent randomized controlled trials. In both studies ROLONTIS met the pre-specified endpoint of non-inferiority in duration of severe neutropenia and met all secondary endpoints. The safety profile was similar to pegfilgrastim.

Last week at the ASCO Supportive Care in Oncology Symposium in San Francisco, we presented data from both [Phonetic] pivotal Phase 3 trial, which included a total of 643 patient. The analysis provided integrated efficacy in safety data to clinicians that were consistent with result from the individual studies.

To summarize, we have an exciting late stage oncology pipeline with important near term milestone on pozi and ROLONTIS.

Now let me turn it back to Joe.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, Dr. Francois, and thank you, Kurt. Let's then -- I'd like to open it up for questions now, operator, if you could do that?

Questions and Answers:

Operator

Of course. [Operator Instructions] Our first question comes from Alethia Young with Cantor Fitzgerald. Your line is open.

Hi. Good evening, everyone. It is Varun Kumar for Alethia Young. First on Cohort 1, when we think about durability, do you get a sense from regulatory agency that they are looking for a certain minimum duration? And are you confident that response rate is not -- it's the only hurdle that you'll get for approval?

Joseph W. Turgeon -- President and Chief Executive Officer

Let me answer the first part, I want you to repeat the second. I didn't hear the second part, but let me answer the first part. First thanks for the question. When it comes to duration, when you have an agreement with the agency, you don't give a specific number. In other words, you don't get a hard number that says you have to be x amount of duration. What it is, and is clinically meaningful is what they give you for the exact verdict. So what we have to -- that's negotiable depending on the unmet need etc. And so the word that we'll have to negotiate with the agency at the end is, is it clinically meaningful or not.

And what was the second part of your question?

Varun Kumar -- Cantor Fitzgerald -- Analyst

Yeah. It was on the response rate. So looks like the response rate certainly is the criteria, but it's requires a supporting durability along with it, right, if I understand it correctly?

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. Obviously there are three things that any drug is going to be looked at, right. First of all, is your primary endpoint that happens to be our overall response rate in this particular trial. Second would be, as you said, our duration PFS. Then the third thing I look at is the safety profile of the drug. So that would be the three things that they would look at.

Varun Kumar -- Cantor Fitzgerald -- Analyst

And maybe a second question on, if you can remind us the frequency of scans in the study, and how does it compare to MD Anderson study previously done?

Francois Lebel -- Chief Medical Officer

Sure. So the frequency in the MD Anderson study was every eight weeks. We've introduced in this trial, a first scan at four weeks and then the second scan is at eight weeks and thereafter it's all eight weeks. So that should help us in detecting early response and being able to document them accurately.

Varun Kumar -- Cantor Fitzgerald -- Analyst

Thank you very much. And maybe just a last one, once we have the data in December from cohort 1, how does that affect your confidence for the next cohort 2, which is HER2 and I think the data is expected mid-next year?

Francois Lebel -- Chief Medical Officer

Yeah. So you have to remember the first four cohorts are independently -- they're all independent of one another. So they have different sets of assumption for statistical test of hypothesis. And so there winning in one may not influence the other cohort or losing in one would also be independent of the other cohorts. I think the other thing I would add there is, cohorts 1 and 2 is pre-treated patient or previously treated, but you got to remember that cohort 3 and 4 is a significantly different patient population, which is first line, and obviously, that's recruiting well. We're continuing to be very optimistic about that.

And also, I'd like to remind you that -- the FDA allowed us to start the treatment-naive patient here and as we interpret that as a good sign that they don't want to wait necessarily to have the final answer on cohort 1 and 2. So we're really optimistic about all of them and can't wait to turn the card, if you want, in December.

Varun Kumar -- Cantor Fitzgerald -- Analyst

Thank you very much, and thanks for taking the questions.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you.

Operator

Thank you. And our next question comes from Ed White with HC Wainwright, your line is open.

Ed White -- HC Wainwright -- Analyst

Hi guys. Thanks for taking my questions.

Joseph W. Turgeon -- President and Chief Executive Officer

Hey, Ed.

Ed White -- HC Wainwright -- Analyst

So maybe we can just start with the basket study for pozi. I know it just started, I'm just wondering if you have any ideas where the first indication will be when you're looking at the preclinical and clinical data that you have on closing now. I know you're running the basket to see where it's going to be, where do you think it will be most effective. But I'm just wondering if you have any idea right now what indications would be first in your mind?

Francois Lebel -- Chief Medical Officer

But I think we would provide you additional education or additional information at a later date. I think we just wanted to say today that in collaboration with MD Anderson, our basket study as open, not only open but enrolled its first patient. And it's not posed yet on clinicaltrials.gov. We anticipate that will occur very soon. But until that's done, I don't kind of want to say any more than that.

Ed White -- HC Wainwright -- Analyst

Okay. Fair enough, Francois. And then as I always do, I typically ask about any changes in the ROLONTIS study and since the last time we spoke, there has been another biosimilar approved. Is anything been changing in the market or is it progressing as expected and it still [Phonetic] -- and just want to get your thoughts on that?

Thomas J. Riga -- Executive Vice President and Chief Operating Officer

Hey. It's Tom Riga. How are you?

Ed White -- HC Wainwright -- Analyst

Good. Tom, how are you?

Thomas J. Riga -- Executive Vice President and Chief Operating Officer

Good as you. Hey, you saw the news. The next biosimilar has entered the market. We're monitoring that closely. I think that market is a dynamic one. As you have another end-treatment biosimilars into it, but we remain confident as we've consistently said, of having a BLA filed, which is not through the 351(k) pathway, is a novel asset, provides us some unique opportunities as it relates to controlling our own destiny at the levels of access and reimbursement, lifecycle management of the asset and we're thrilled to have submitted to BLA in October. And anxiously await that action date. So that we can ultimately get this product approved by the agency and be able to enter that market.

Ed White -- HC Wainwright -- Analyst

Great. Thanks, Tom. And maybe coming back just on pozi and the competitor TAK-788. We've seen a lot of data from both now and just want to think about your thoughts on how far ahead, do you think you're going to be at launch and how you're going to position based on the data we know now, how you're thinking of positioning the drug to take maximum share, or to maintain maximum share actually since you are in the lead.

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. I'll start, and then Dr. Francois can talk about data also if he wanted to. But let me tell you this. Ed. As far as positioning, I am excited that we're turning over our card when I just starting our trials. We've got two fully enrolled registrational trials with data, which we just said in December we're flipping that card. So the first thing I'll say, positioning first to market means a lot, into a lot of launches and first to market gives you a great advantage here.

So we're looking forward to that. If the data are good, we would meet with the agency and hopefully file. I can't speak, I can only speak to ours or monitor the other products as a good. I can tell you this, I am not surprised that you see other potential products looking at the market. That shows the unmet need. It is truly an unmet need here. It's a large group of patients that need help, as we said, like you asked about the basket, but maybe even expanding there.

So the bottom line is, we'll monitor any and all other, because of the products. I can tell you that we have two fully enrolled cohorts and we're really happy with the 3 and 4 that are enrolling and actually following the signs with three more cohorts. So we're well on -- we're well ahead here. I can't give any, an exact date on anything other than I'm pleased with the position we're in.

Ed White -- HC Wainwright -- Analyst

Okay. Thanks, Joe.

Operator

Thank you. And our next question comes from Maury Raycroft with Jefferies. Your line is now open.

Maury Raycroft -- Jefferies -- Analyst

Hi, everyone. Congrats on the progress, and thanks for taking my questions.

Joseph W. Turgeon -- President and Chief Executive Officer

Hey, Maury.

Maury Raycroft -- Jefferies -- Analyst

Thanks for the clarity. Hi, Joe. Thanks for the clarity and having the data in December. I'm just wondering if you can save the database is locked and any more granularity on whether it would be earlier or later in December?

Francois Lebel -- Chief Medical Officer

So we're not giving you an exact date and either can I answer whether or not the database is locked. Remember, this is the data, the central imaging lab is in the process of analyzing lots of data and is being sent when they analysis is complete. It's going to be sent to an independent data review committee will, in turn, after examining, conducting the analysis potentially asking number of question, then would disclose to us, whether or not we've met the primary endpoint.

Maury Raycroft -- Jefferies -- Analyst

Got it. Okay. And as far as for that review board, I was just wondering if you could provide any more specifics on how many people are involved in the independent review board and what kind of questions could -- are they going to -- what are they going to be looking at you come up with the unified decision and what kind of questions could come out of that?

Francois Lebel -- Chief Medical Officer

Yeah. So the analysis are pre-specified in the protocol. And there is the statistical analysis plan that gives us a lot more details. So we're not going to disclose that, but this is all laid out on paper if you want as guided to the IDRC, which is the independent board. And they have of the ability to request to review some of the scans if they want, and that's supported. We absolutely want to be forthcoming, if there is any question, that the central imaging lab would provide them access to whatever they want to arrive at their final decision and final recommendation too.

Joseph W. Turgeon -- President and Chief Executive Officer

Hey, Maury. I'll just add. You asked who are this, I tell you that right now. Oncologists who deal with non-small cell lung cancer knowing inside out. So they are the right people to evaluate the outcome.

Maury Raycroft -- Jefferies -- Analyst

Got it. Okay. Okay, and then, and so they make a decision, they give you guys a general answer to that decision or are they going to give you the overall response rate, and additional data and then what could we end up expecting? What could end up in the press release that you guys put out? What kind of specifics should we expect in that? I guess.

Francois Lebel -- Chief Medical Officer

Yeah. So their main task is, again, to there are detailed guidance, but their main, the fundamental -- this in on our recommendation they make, is relates to whether or not the overall response rate met the pre-specified end point lower bound etc that was stipulated in the protocol, that's their attack. That's what they will do. And so we look forward to receiving that. And I can't remember if there was another angle to your question there.

Joseph W. Turgeon -- President and Chief Executive Officer

Well, you asked about the press release would say, I think, you said, Maury, obviously you're going to know, did we hit the primary endpoint or not, the ORR, you'll know that. You'll know some -- there will be some comment on duration and safety. So I think you'll have not all of the information from the study, because we want to present that at a meeting. But I think you'll have the primary endpoint, you are in or not. Some comment on duration PFS and there's some comment on safety also, I think that's safe to say.

Maury Raycroft -- Jefferies -- Analyst

Perfect. Okay. And then last question is just on ROLONTIS. Are you going to do a press release when the BLA is accepted for ROLONTIS? And then any comments on whatever issues were addressed to give you guys confidence to resubmit.

Joseph W. Turgeon -- President and Chief Executive Officer

I'll start, we will certainly let you know when have a PDUFA date. I think that's safe to say. And the second part was, what was the second part of your question, I'm sorry.

Maury Raycroft -- Jefferies -- Analyst

Just if you're providing any more clarity on the manufacturing issues that were addressed, do you -- have you guys confidence to refile again?

Thomas J. Riga -- Executive Vice President and Chief Operating Officer

Hey, Maury. It's Tom Riga. We have now provided more details than what was in the prepared remarks. We worked closely with the agency. We implemented their guidance. We feel that we've learned from their feedback and put together a strong package and look forward to their action date.

Maury Raycroft -- Jefferies -- Analyst

Fair enough. Okay. Well, congrats again and thanks for taking my questions.

Joseph W. Turgeon -- President and Chief Executive Officer

Thank you, Maury.

Francois Lebel -- Chief Medical Officer

Thank you.

Operator

Thank you. And our next question comes from Michael Schmidt with Guggenheim. Your line is now open.

Michael Schmidt -- Guggenheim -- Analyst

Hey guys. Thanks for taking my questions. Maybe just a follow-up on cohort 1 of the ZENITH study, just operationally I suppose, I guess what triggers the analysis. Is it a certain pre-specified follow-up period or is there another trigger that would trigger the actual analysis?

Francois Lebel -- Chief Medical Officer

Yes. The cut-off date for analysis was triggered by having a minimum six months follow-up on the last patient that was entered in the study.

Michael Schmidt -- Guggenheim -- Analyst

Understood. Okay. And is that follow up the same for the exon 20 HER2, population has been different for that stuff, for that cohort?

Francois Lebel -- Chief Medical Officer

So it is -- cohort 2, we have not provided any indication other than, say, that we would have a top-line data release mid-year in 2020.

Michael Schmidt -- Guggenheim -- Analyst

And then a question regarding front-line patient populations. I know the cohort 3 and 4 are still enrolling. But I guess, assuming or should you meet the primary endpoint or the endpoint in cohort 1? I suppose, how do you think about accessing the first line of market longer term. I guess, what type of trial designs might be adequate to get to front-line exon 20 patients?

Francois Lebel -- Chief Medical Officer

Yeah. I think that's an excellent question. Obviously, we're going to seek guidance there. It's going to depend obviously on the results that we got to get in cohort 1 and we are a little very much engaged. The FDA, they try to understand what their expectation is, and it has changed from original, but obviously if it's highly positive result, then we would have to discuss with the FDA for ethical reasons. We need to have a look at the data sooner. But right now we can't, we have to see the data first.

Michael Schmidt -- Guggenheim -- Analyst

That's great. Thank you. And then just maybe regarding ROLONTIS, it's probably fair to assume a standard review, is that correct? And then follow up would be, how do you think about, I guess, what size -- to what degree do you need to build a commercial infrastructure? I guess, how would you size that to commercialize the drug in the US?

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. It's just standard review, Michael, that 10-month review. I think that's what we do expect. Tom, why don't you mention on the sales force build up?

Thomas J. Riga -- Executive Vice President and Chief Operating Officer

Yeah. So Michael, if the submission was 24th standard review you get back into Q4'ish 2020 timeline, typically a commercial build out six months. Some are a bit sooner than that when you start building out that infrastructure. We have always prided ourselves on being a lean operation when it comes to FTEs and we will look to build an adequate yet resourceful and scrappy commercial function. But we would look to start that about six months prior.

Joseph W. Turgeon -- President and Chief Executive Officer

Michael, and you see, I have mentioned this to you in the past, I'll remind you that. When we sold our in-line products to sales force, went with it. We did back some key leadership that are experienced with both this marketplace and also in putting together sales teams etc. So we do have a jump-start on that already by having people here who know how to do that.

Michael Schmidt -- Guggenheim -- Analyst

Sounds good. Well, thanks for taking my questions.

Thomas J. Riga -- Executive Vice President and Chief Operating Officer

Thank you, Michael.

Operator

Thank you. And we have a follow-up question from Ed White with HC Wainwright. Your line is open.

Ed White -- HC Wainwright -- Analyst

Hi guys. Thanks for taking the follow-up. There was no comments in the prepared remarks on the Focused Interferon Therapeutics platform. I was just wondering if you can give us a brief update there? Thanks.

Thomas J. Riga -- Executive Vice President and Chief Operating Officer

Sure. So as you know, we in-licensed this asset and there was a Phase 1 dose escalation study that have been under way. So we have been working very closely with investigators to restart that study and examine in great detail all the work that has been done so far, preclinical, clinical, as well as consider whether or not the protocol needs to be amended etc. So there is active interaction with UCLA at this point mainly, who have the licensing -- that we licensed it from, I believe, including Pittsburgh. you missed the Pittsburgh Report.

Francois Lebel -- Chief Medical Officer

So we're actively working with them on the, that first asset. You got to remember they are potentially more than one asset that could be derived out of this platform. We know that they are -- we're interested in the heat-shock protein preclinically and they are also, I referred to it as the UCLA freezer, where there are a number of drug candidates that are there and we've been strengthening our team to develop algorithm to go through these assets that we pick the right ones to file an IND with and create additional preclinical data. So a lot more to come in the future and so there is just a lot of activity and it's an early asset. So we obviously wanted to focus on our late-stage asset in terms of update.

Ed White -- HC Wainwright -- Analyst

Great. Thank you, Francois.

Francois Lebel -- Chief Medical Officer

Sure.

Operator

And I'm not showing any further questions at this time. I will now turn the call back to Joe Turgeon for any further remarks.

Joseph W. Turgeon -- President and Chief Executive Officer

Yeah. Thank you, operator. Again thank you to everybody. I'm really pleased with our crystal clear focus, our progress and exciting times. I'm looking forward to turning the card over in December, and we're going to see the early positive data and that would from -- that the data from Cohort 1 and also that looking forward to that PDUFA date. So thank you for everybody's interest, and we'll talk to you all soon.

Operator

[Operator Closing Remarks]

Duration: 32 minutes

Call participants:

Shiv Kapoor -- Vice President of Strategic Planning and Investor Relations

Joseph W. Turgeon -- President and Chief Executive Officer

Kurt A. Gustafson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Francois Lebel -- Chief Medical Officer

Thomas J. Riga -- Executive Vice President and Chief Operating Officer

Varun Kumar -- Cantor Fitzgerald -- Analyst

Ed White -- HC Wainwright -- Analyst

Maury Raycroft -- Jefferies -- Analyst

Michael Schmidt -- Guggenheim -- Analyst

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